May 26, 2003	Monday	Rabi-ul-Awwal 23,1424

SHARES maintained their upward drive for the third week in a row as investors were not inclined to take even a technical breather despite political polarization over the LFO and implications of the prevailing stand-off for a highly sensitive stock market.

Bulls seem to be eying the index level of 3,100 points before taking a technical breather, some analysts predict, but much will depend on the settlement of the LFO issue in a joint opposition-government meeting possibly on May 26 to chaired by the prime minister.

Investors, however, are not inclined to entertain bearish ideas at least for the near-term despite opposition’s threat of march on Islamabad if the talks on LFO fail.

The KSE 100-share index consolidated well above its benchmark mark level of 3,000 as the strength of the blue chip sector spilled over to all the sectors amid a boom-like trading conditions and an unsatisfied buying euphoria even on the neglected shares.

All previous records both in terms of index level and market capitalization were bettered at 3,079.95 and Rs679 billion, both being all-time high figures so far. Leading analysts predict an index level of 3,100 point during the next couple of weeks if all goes well on the political front. The net gain over the week was 76.60 points or 3.25 per cent.

“Political risks are, however, there owing to the current deadlock on the contentious clauses of the LFO, if any of the contenders don’t show flexibility it may follow a big showdown.”

As the market’s meteoric rise indicates, investors are not worried over the LFO standoff at least for the near-term, although it could have a negative fallout on stock trading if both the parties did not soften their stand on the issue.

There has been all along positive news from all the fronts, the most stimulating among them being the extension of tax exemption on capital gains at least for the next two years.

“Pre-budget buying is still to make debut,” brokers said. “The next week preceding the national budget on June 7, could be very crucial for the market if all goes well with the LFO deadlock.”

After early rising to 3,027 points boosted by reports that the US may write off the outstanding loan of $1.8 billion before the president’s proposed visit next month on Bush’s invitation, mid-week selling pushed it down to 2,980, being the lowest for the week.

But reports of extension of exemption on capital gains and an early final bidding date for the sell-off of PSO lured investors back in the market who covered positions, pushing the index firmly above the 3,000 level.

The notable feature was that most of the MNCs came in for strong support along with the local blue chips under the lead of Colgate Pakistan, which rose in each session by Rs5 to Rs7 after the reports of its joint venture deal with Tately of India to market tea here reached the market.

Some of the leading shares, whose managements were awarded by the prime minister for their excellent corporate performance during the last year also remained in active demand and rose appreciably.

The early run-up was attributed to strong selective buying in some of the pivotals ahead of KSE’s award giving ceremony to top 25 companies and the latter selling to lack of follow-up support.

In a striking similarity, both the Mumbai and the Karachi Stock Exchange are rising in unison to stay above the 3,000 point index level boosted apparently by the current peace moves but which of the two has more supporting financial factors will outwit the other in their onward drive to test new highs, brokers said.

“The index is expected to be sustained above the level of 3,000 reflecting the presence of strong buying from all the quarters,” says a leading analyst. “What after that is anybody’s guess.”

Opinions are divided about the market’s liquidity-driven meteoric rise as leading among the analysts are not sure whether or not it could be sustained in the coming trading sessions.

“Any speculative liquidity-driven rally motivated by capital gains may not be reliable in market parlance,” says a leading stock broker “there are some other fundamentals sustaining factors, some of which are still lacking.”

Despite the current overtures, peace with India may remain an elusive goal and the perception of a harsh budget early next month could take away some of the current financial stimulants to other sectors of the economy.

“Surplus liquidity is floating like anything, bank rates are at the lowest, badla rates and volumes are manageable, there are not many other alternate investment avenues at the moment,” they said “only fools could miss the opportunity to go for stocks as gold and price flare-up in both tells the whole truth.”

All the sectors including the neglected and undervalued shares participated in the run-up as general investors as well as the financial institutions were not inclined to miss the bandwagon owing to an attractive bait of quick capital gains. Some of the shares which face the shortage of floating stock rose more then Rs100 against their face values of Rs10.

Plus signs dominated the list throughout the week, some of the blue chips as well as second-liners hitting their new career-best levels under the lead of hereto neglected cement, sugar, Jute and some others, which finished with smart gains. Losses on the other hand were mostly fractional barring Parke-Davis, Treet Corporation, Gillette Pakistan, Dawood Hercules some others.

Trading volume soared to 1.163 billion shares after a lean last week as leading shares, notably PTCL, Hub-Power, Sui Northern Gas, PSO remained in strong demand throughout the week.

Some of the secondliners, notably Dewan Motors, FFC-Jordan Fertilizer, D.G. Khan Cement, Lucky Cement, KESC, WorldCall, PIAC, ICP SEMF and Investic Securities also came in for active bouts of buying and selling.

FORWARD COUNTER: Speculative issues also remained in strong demand on the cleared list and generally finished with good gains, leading among them being PSO, up Rs6.30 at Rs214.75.

Sui Northern Gas followed it, higher Rs1.10 at Rs32.15, while PTCL, Hub-Power, FFC-Jordan Fertilizer and some others posted modest to good gains.—Muhammad Aslam